Nonprofit Coalition Lobbies for CITs’ Inclusion in 403(b)s

As the push to allow 403(b) plans to invest using collective investment trusts continues, a coalition of 20 nonprofit organization leaders and former policymakers sent a letter to Securities and Exchange Commission Chair Paul Atkins on April 21, urging the SEC to take “swift action” in doing so.

The letter refers to employees of “faith-based and nonprofit churches, organizations and allies” as among 14.5 million Americans “stuck with the short straw” in retirement saving. While CITs have become popular vehicles for 401(k)s to provide target-date funds—and in 2024 surpassed mutual funds to hold the largest share of TDF assets—because CITs are not subject to SEC filing requirements, 403(b)s cannot hold them. In general, 403(b) plans are defined contribution retirement plans that 501(c)(3) employers—including public universities and school systems; religious organizations; and certain health and hospital service organizations—provide to their employees.

The signatories on the letter include Jordan Sekulow, executive director of the conservative, Christian-based American Center for Law and Justice and a member of ACLJ Action, the 501(c)(4) advocacy organization branch of the ACLJ; Chad Connelly, president and founder of the faith-based Faith Wins organization; Jon Schweppe, a former senior policy advisor at the Federal Trade Commission; and former Senator Rick Santorum, R-Pennsylvania, among 16 others.

CITs are bank products regulated by the federal Office of the Comptroller of the Currency and state banking regulators, not securities regulated by the SEC. CITs generally offer lower fees than mutual funds, making them an increasingly attractive option in defined contribution retirement plans. Congressional action is required to allow CITs to be included in 403(b) plans.

The SECURE 2.0 Act of 2022 amended Internal Revenue Code Section 403(b) to allow 403(b) plans with custodial accounts to invest in CITs. However, for CITs to be a permissible investment for 403(b) plans, securities laws need to be amended as well.

In December 2025, the House of Representatives passed the Retirement Fairness for Charities and Educational Institutions Act of 2025 as part of the larger Incentivizing New Ventures and Economic Strength Through Capital Formation Act, which includes a provision making that change. The legislation was referred to the Senate Committee on Banking, Housing and Urban Affairs.

“Denying access to CITs, for no reason other than the sector in which individuals work in, unfairly sacrifices our returns in the name of a head-scratching technicality,” the letter stated. “In the private sector, CITs are the centerpiece of corporate employees’ saving strategies.”

The coalition’s letter cited a June 2025 study by the Vanguard Group, which found that, for plans Vanguard administers, average mutual fund fees were more than double those of CITs (0.16%, compared with 0.07%), creating a 0.09-percentage-point difference. Among the largest 401(k) plans—those exceeding $4 billion in assets—the fee gap grew to 0.11 percentage points.

“For faith-based, nonprofit professionals and community-based workers across the country, these lost returns add up over time,” the letter stated. “If CITs were allowed in all 403(b) plans, nonprofit workers could see an additional $525 million to $590 million in retirement savings each year.”

The letter also referenced Americans’ support for broader access to CITs. A BlackRock survey fielded earlier this year found nearly two-thirds of U.S. registered voters agreed that all retirement plans should have access to the same investment options as one another.

“Under your leadership, the SEC has taken landmark steps to ease regulatory burdens that stifle innovation, scale back ideologically driven enforcement and promote robust competition to advance investor interests,” the coalition’s letter stated. “Using the authority provided to the Commission under federal securities law to allow all 403(b) plans access to CITs is a natural continuation of this sensible, pro-market vision.”

The letter did not specify what authority Atkins has to allow the inclusion of CITs in 403(b)s.

Organizations such as the Investment Company Institute—which recently addressed operational challenges to bringing CITs to 403(b)s and presented solutions to solve them—have also expressed efforts to lobby public officials to advance the legislation.

“Expanding access to CITs would give millions of Americans investing in 403(b) plans greater choice and help level the playing field with other retirement plans,” an ICI spokesperson wrote in an email to PLANSPONSOR. “We are working closely with bipartisan members of the U.S. Senate Banking Committee to champion investor choice and advance this legislation.”